Demand for Gold set to Increase Says World Gold Council
Juan Carlos Artigas, the Director of Investment Research at Gold Investor says demand for gold looks set to increase in 2019 thanks to a turbulent global economic market and political unrest around the world. Risk and uncertainty are reaching higher levels across a number of key economic yardsticks, there is talk of another global recession and Europe is increasingly unsettled in both its national markets and political institutions. Against this backdrop, appetite for risk is changing and investors are turning to gold for its long-term savings surety.
Artigas points to a drop in market stability with stock prices elevated but bonds low. In the US especially, investors are faced with a real lack of protection from risk with the Treasury yield 1.5% lower than this time a decade ago. Across the pond in the EU, Artigas points out that many investors are jittery thanks to the long shadow being cast by Brexit and the many unknown cards that are still to play – giving investors pause for thought. Political unrest too across the block is leaving many nervous as new power struggles emerge.
Add to this mix protectionist policies, which are pushing up costs worldwide and bring threats of tariffs and trade wars, and it’s easy to see why investors are turning to the long term stability of gold.
On the other side of the world, it’s a different story – which again favours gold – as economies in Asia mature and grow, consumer spending and appetite for gold in the form of jewellery is also on the up.
Artigas says, “…strategically, there are four factors that make gold an attractive investment asset. It has been a source of return for investors’ portfolios. Its correlation to major asset classes has been low in both expansionary and recessionary periods. It is a mainstream asset that is as liquid as other financial securities. It has historically improved portfolio risk-adjusted returns. These factors appeal to investors small and large, including central banks as they continue buying gold to diversify their foreign reserves and counterbalance fiat currency risk.”